Your floor may or may not be able to be refinished. Parkay is usually held together by running a wire through the wood latts. If you were to run a sander over them, it may pull the latts right out of the wire. If you want to go this route, it's best to have a pro tell you if your particular floor can be refinished. But before you do this, if you know your floor isn't that level, I wouldn't do it because you won't get an even sanding job with high and low spots in the floor.
As to wanting to replace/remove 'bad spots', you really can't do it unless you replace the entire 'square'. Again, because of the wires in the squares. Yes, new doesn't match old so you're back to getting a pro in to see what can be done. After that, you can decide how much you want to do, yourself, or if you want the pro to do the work.